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Petronet LNG, India's largest gas import terminal operator, has issued a warning to its customers regarding settling their 'use or pay' dues within three years of default. The CEO, Akshay Kumar Singh, mentioned on Tuesday that customers failing to do so risk having their bank guarantees encashed. The company reported a profit of Rs 1,191 crore in the October-December quarter, showing an increase from Rs 1,181 crore in the same period the previous year, mainly due to heightened utilisation at its liquefied natural gas (LNG) terminals.
The surge in profit was attributed to a 40% increase in LNG processing at Petronet's terminals in the quarter compared to the previous year. The heightened demand was fueled by falling international gas prices, leading to increased domestic demand. Singh noted a remarkable 96.5% capacity utilisation at Petronet's Dahej import terminal, the largest in India, during the last quarter, a noteworthy achievement during the winter season. He anticipates further expansion in capacity utilisation during the upcoming summer.
Auditors raised concerns about Petronet not receiving 'use or pay' charges totalling Rs 431 crore for the calendar year 2021 and Rs 849 crore for 2022. Although recognised as operating income in previous financial years, these charges are payments customers must make for the capacity they book at gas import terminals, even if they don't use it.
To address the issue, Petronet has informed defaulting customers that their 'use or pay' charges can be waived proportionate to the additional business they bring to the company. Customers are required to bring extra LNG volume beyond their committed cargoes to Petronet terminals, and the revenue generated from this additional business will serve as the 'use or pay' charge. Defaulters from 2021 have until December 2024 to utilise this mechanism, while those from 2022 have until December 2025.
Singh expressed confidence in recovering the dues, citing the improved prices of LNG and the intention of off-takers to bring more cargo. Meanwhile, Petronet's long-term LNG purchase deal with Qatar, due for renewal, is still under negotiation, with no specific deadline mentioned for its conclusion.
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